It's actually front cutting the engaging faces of the dogs on the gear so they interlock with each other and stay engaged under load better.

Usually you wait until you start to have problems with your stock dogs slipping then you have them cut.  The cutting process does take away some of the hardened material but some guys do a cryo and a micro polish to regain some of the rockwell hardness on the dog face that is lost when cutting them (this set was cryo'd and micro polished = AKA stuck in a barrel of vibrating material, walnut shell or something?) .

This one was done by Whittier Custom Racing (Greg) who I've heard is now out of business

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